Starting a handyman business in Texas requires planning around entity choice, state and local permits, regulated trades, taxes, hiring, and costs. This guide explains how to form or register your business with the Texas Secretary of State, when to get an EIN, what state-licensed trades to avoid unless licensed, local permit and contractor-registration variability, basic tax and employer obligations, banking and funding preparation, and the main cost categories to budget before you begin.
Registration & Entity Setup
Decide whether to operate as a sole proprietor, partnership, LLC, or corporation—each choice affects liability, taxes, and compliance. To create an entity with limited liability or a separate legal identity, file the appropriate Certificate of Formation with the Texas Secretary of State using the official forms (for example, Form 205 for LLCs or Form 201 for corporations).
When filing a Certificate of Formation you must name a Texas registered agent and pay the Secretary of State’s filing fee published on the SOS form pages; the SOS provides filing instructions and PDFs for each form. Individuals or unincorporated businesses using an assumed name (DBA) must file an assumed-name certificate with the county clerk in each county where they maintain business premises; entities using an assumed name must file with both the SOS and the county clerk. Check county clerk procedures for local execution and fees.
Obtain a federal Employer Identification Number (EIN) from the IRS when you plan to hire employees or when banks, vendors, or payroll providers require it; follow the IRS application instructions and keep EIN records. If you form an entity that the SOS registers (corporation, LLC, LP), expect the Texas Comptroller to request the Franchise Tax Accountability Questionnaire to determine franchise tax setup and filing obligations.
Be aware of federal beneficial-ownership (BOI) changes: FinCEN issued a final BOI rule on August 11, 2026 (effective August 14, 2026); under the current rule U.S.-created companies and U.S. persons are exempt from BOI reporting while certain foreign reporting companies may remain subject to reporting. FinCEN BOI filing obligations are separate from bank customer‑due‑diligence rules (banks may still collect ownership information).
Filing your formation documents does not automatically complete other registrations—you will still need to register for state tax accounts, local permits, contractor registrations, or employer accounts as applicable to your operations.
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Permits & Local Requirements
Texas does not issue a single statewide "handyman" occupational license; many common home-repair tasks may cross into state-regulated trades. If you intend to perform regulated electrical, plumbing, or HVAC/ACR work, you must meet the licensing and contractor requirements enforced by the relevant state agencies.
Taxes & Ongoing Compliance
If you sell taxable goods or taxable services, obtain a Texas Sales and Use Tax Permit from the Texas Comptroller before collecting sales tax; the Comptroller’s online registration is the official route and the Comptroller provides guidance for sellers located in the United States. Entities registered with the SOS may also be subject to Texas franchise tax procedures—complete the Comptroller’s Franchise Tax Accountability Questionnaire when prompted to establish franchise-tax accounts.
As an employer, obtain an EIN from the IRS before hiring, register for state unemployment tax accounts with the Texas Workforce Commission, and follow federal payroll‑tax withholding and reporting rules administered by the IRS and Department of Labor. Texas employers must report newly hired employees to the Texas Employer New Hire Reporting Operations Center; the state guide specifies the required data elements and filing timeframe.
Federal employment eligibility verification (Form I-9) and federal wage-and-hour obligations apply to employees; follow USCIS and DOL guidance for I-9 completion, wage-and-hour posting, and recordkeeping. Do not treat entity formation as completing your tax or employer registrations—register separately with the tax and workforce agencies that apply to your business.
Business Banking & Funding
Expect banks to apply Customer Identification Program (CIP) and Customer Due Diligence (CDD) procedures when you open a business account; banks commonly request identity documents, formation paperwork, EINs, and may ask about beneficial owners under their CIP/CDD policies. FinCEN’s BOI rule is separate from a bank’s CIP/CDD duties—domestic companies exempt from BOI filings may still be asked for ownership documentation by a bank.
Prepare standard account documentation before visiting a bank branch (personal ID, formation documents, operating agreement or corporate resolution, and EIN when applicable) and confirm the specific bank’s current account-opening checklist in advance. For funding, federal programs such as SBA loan alternatives exist; review SBA guidance and lender requirements when preparing financing applications.
Hiring & Labor Market
Follow federal wage-and-hour rules administered by the U.S. Department of Labor and use the federal minimum-wage guidance as a baseline for pay; check local ordinances if you plan to operate in cities with additional labor rules. Complete Form I-9 employment-eligibility verification for every employee and maintain required employment records.
Report new hires to the Texas Employer New Hire Reporting Operations Center using the state’s online tools and follow the reporting timeframe described in the Texas Office of the Attorney General’s guidance. Decide whether to purchase workers’ compensation insurance—Texas allows many private employers to elect coverage; understand how choosing to be a subscriber or non-subscriber affects liability and reporting obligations. Be cautious about worker classification (employee vs. independent contractor), as misclassification can create payroll-tax and liability exposure.
Cost of Doing Business
Budget for formation and filing costs: the Texas SOS publishes the Certificate of Formation filing fee for LLCs and corporations on its forms (see SOS filing instructions). Expect additional costs for a registered agent if you hire a third party. Licensing-exam fees and application costs for regulated trades are set by TDLR or TSBPE and vary by license type.
Sales and Use Tax Permit applications are available online from the Comptroller and are noted as free for sellers located in the United States, but local permit, contractor-registration, inspection, and zoning fees are set by cities and counties and vary by location. Insurance and bonding (general liability, commercial auto, workers’ compensation if elected, and trade-specific bonds) are significant variable expenses—obtain quotes from authorized insurers based on your payroll, revenue, and risk profile.
Helpful StartupWerx Resources
References
- Formation of Business Entities and Forms (Certificate of Formation forms and instructions)
- Certificate of Formation — Form 205 (LLC) (shows Filing Fee: $300 and filing instructions)
- Formation of Texas Entities FAQs (Assumed name / DBA filing locations and requirements)
- Apply for an Employer Identification Number (EIN) — IRS
- Beneficial Ownership Information (BOI) — FinCEN (BOI landing page)
- FinCEN news release: FinCEN Permanently Ends Beneficial Ownership Reporting Requirements for Millions of Small Business Owners (final rule announcement)
- Electricians — Texas Department of Licensing and Regulation (TDLR) (who must be licensed; license types; forms and exam info)
- Air Conditioning and Refrigeration Contractors (TDLR) — licensing and contractor requirements
- Consumer Information — Texas State Board of Plumbing Examiners (TSBPE) (plumbing licensing oversight)
- Guide to Starting a Business — State of Texas (licenses and permits by business type; local permit routing guidance)
- How To Get a Texas Sales and Use Tax Permit (STAR/Comptroller guidance)
- Franchise Tax Accountability Questionnaire (Texas Comptroller)
- Employer New Hire Reporting — Quick Reference Guide (Texas Office of the Attorney General)
- What is workers’ compensation? (Texas Department of Insurance — Division of Workers’ Compensation)
- Customer Due Diligence (CDD) Rule FAQs — FinCEN (consolidated CDD FAQs and guidance)
- SBA — Loan programs and funding options (7(a), CDC/504, Microloans)
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